Debate: Buying Sites Vs. Building Sites

Some of our blog posts and podcast episodes here at Empire Flippers are about how to build out and scale niche sites. This tends to appeal to the Do-It-Yourself crowd that’s looking to get started and are looking for more information on how to do it.

This brings up an interesting question: Is It Better To Build Or Buy Websites?

There are some pretty compelling arguments on both sides. We’ve laid out our thoughts throughout the site, but thought we’d hand this post over to two well-known and successful guys online. Both are experts at both building and buying websites and we’re so glad to share their thoughts with you in this debate post!

Here are our guests:

Chris Guthrie

Chris is a well-known online personality, host of the MMOTI podcast, and runs the MakeMoneyOnTheInternet.com blog. He started his online career fumbling through creating and managing a video game forum and ended up creating and selling a niche site for a staggering 6-figures! (Take THAT niche site haters!)

We’ve gotten to know Chris quite well over the past couple of years and found his approach and his success extremely impressive.

Spencer Haws

We’ve mentioned Spencer quite often here as he continues to crush it building niche websites. He created the highly-recommended Long Tail Pro keyword research tool, blogs at NichePursuits.com and is the host of the Niche Pursuits Podcast.

He has a tendency to drop knowledge-bombs almost everywhere he goes and today is no exception.

This debate post includes four parts:

Chris has read Spencer’s post and will offer a rebuttal in favor of buying sites

Spencer has read Chris’s post and provides a rebuttal in favor of building sites

Warning: I found some chunky gold nuggets in here and I’m sure you will too. Both of these guys are extremely successful with their ventures and we’re so happy they agreed to go at each other for a bit here so that we can all learn something new. When you’re finished, I’d really love to hear from you in the comments! Please feel free to share your ideas, thoughts, and suggestions!

I’ve edited for formatting/grammar, but have left their arguments intact. Now…on to the debate!

Opening Arguments For Buying Websites From Chris Guthrie

Hey I’m Chris Guthrie and I’ve been making money with websites ever since I launched a video game forum way back in 2005. That forum went on to hit over 500,000 page views per month (booyah!) and yet I only ever made $500 per month from Adsense with it (lame). If I didn’t waste all of my time trying to build that community from scratch I could have avoided all of the countless hours I wasted trying to create something that was never going to be profitable.

Why You Should Buy A Website Instead Of Build One:

Buying websites is a way to bypass all of the tedious work that website builders have to spend working on a project just to get it profitable. Instead as a buyer you are able to make an offer based on the amount of money the website earns each month.

Using the first website I built as an example if I had sold that website I could have maybe gotten $6,000 if I sold it based on 12x monthly income, but once a buyer investigated the amount of time I was spending on that website they’d be able to clearly see that it wouldn’t be an investment worth making. Yet another problem – some websites can suck up your time but not provide enough of a return.

That’s the beauty of buying a website instead of taking on all of the risk and wasting time building one yourself. From a website buyer’s perspective it doesn’t matter how much effort you put into making your website look perfect, or the hours you spent trying to write the perfect articles, or – in my case – how many arguments I broke up between forum members. The only thing that matters is how much money the website is making. This is the type of lens that a website buyer gets to look through when evaluating a website for purchase.

Why Building A Website From Scratch Can Be A Waste Of Time

The biggest problem I see a lot of people making when they start out is by valuing their time at basically nothing. When you try to build a website from scratch it’s a risk that all of the time you spend working could be in vain. Yes that’s right, your website on the “best pink bicycle scooters” may not turn out to be a money maker. Or even worse the “best pink bicycle scooters” website could start making money for a few months and then Google releases a new update and that website stops making money.

When you take the time to build a website yourself the hope is that a website may make money in the long run and sure you might know a lot about how to make an awesome website, but profitability isn’t a guarantee.

Instead… you could just buy a website that is already started.

Let me give you an example…

How I Turned A $500 Purchase Into $7,000+ In Profits:

Back when I first started making decent money online (a few thousand dollars per month) I was doing niche research for 3D related keywords and I stumbled across a website called 3DTVReviews.org. This website had existing content, some link building was already completed, had some existing traffic and even had some keyword rankings in Google (after all that’s how I found the website). So I looked up the domain using WHOIS.net to get the domain owner and then I sent him an email to see if he’d be interested in selling the website because it hadn’t been updated in 6 months. After a few back and forth emails I offered him $500 and he agreed.

After I took ownership of the website I instantly put Amazon affiliate links on the website along with some Adsense ads as well. I also switched over to a different WordPress theme that was better at converting readers into clicking my advertisements and affiliate links. In the 4 months through the holiday shopping period these were my results:

(Nearly $2,000 Profit – Boo yah!)

In total I’ve made roughly $8,000 with this website and that was just the first website I bought as a test to see if this strategy could be effective. Since then I’ve had some great website buys as well as some occasional losers that didn’t provide as great of a return. With this website, it doesn’t get as much traffic as it used to as I’ve turned my attention to my bigger websites (I only buy $10,000+ websites now) but a nearly 1,500% ROI in 3 years isn’t so bad. Ultimately if you have money that you can afford to invest (knowing the risk of going to $0 is a real possibility with any investment), then I encourage you to explore buying websites instead of building them from scratch. At the very least you could buy a website in a niche you’re interested in with some existing traffic that you can build on instead of starting at 0 visitors.

I’ll concede that if you don’t have money that you can afford to risk then this certainly isn’t an option for you, but if you money than it’s worth pursuing.

You can absolutely buy a website that goes to $0 so there is a risk with this method. Every website is different though, which is why it’s important to look at the income history, income sources, traffic history, traffic sources, age of the website, quality of the content, potential duplicate content, quality of links and overall ease of managing the website. I explain all of these factors along with a lot of other ways to improve your chances of picking a winner in my latest Kindle book:

Opening Arguments For Building Websites From Spencer Haws

Justin and Joe presented Chris and I with the opportunity to debate the topic of whether its a better idea to build a website from scratch or to buy an existing site. This is a great topic and one I’m happy to discuss.

First, I want to give a little bit of my own background and why I might be someone who can speak with authority about the potential in building sites from scratch.

I built my first website in 2005. It was a pretty big failure. I went on and built a few more sites between 2005 and 2008. Again, most of these were not successful. However, during this time I started learning a lot about SEO and how to truly do proper keyword research.

I finally got my first taste of success when in late 2008 and early 2009 I built a couple of small niche sites that started making about $20 a month each. These sites were a HUGE motivating factor for me to expand my business and build more sites. Over the next couple of years I built hundreds of sites and quit my full-time job on March 11th, 2011 because my online income had surpassed my “day job” as a Business Banker with Wells Fargo.

I’ve found HUGE success in building my own sites from scratch, and I recommend people start with building their own sites over buying sites to start in MOST cases for a few good reasons.

Pros of Building Websites From Scratch

1. Low Investment. I am going to make the assumption that most people reading this don’t have stacks of cash hidden in their basement. Building a website from the ground up is actually very inexpensive…especially if you write the content yourself. In fact, even if you hire someone to write content for you, design a custom logo, and buy a premium theme; the investment may still only be a few hundred dollars.

When you compare a few hundred dollars that a website might cost with a few hundred THOUSAND dollars that people spend to start a “real” business like a restaurant, the investment is extremely low.

2. Learn Valuable Business Skills. You learn better when you have to struggle through things yourself. Sure, it takes a little bit longer trying to figure out how to set up hosting and configure WordPress and perhaps even customizing the look of your site. But because I had to struggle through lots of little issues with my early websites, I am now MUCH more effective at managing my sites and can get things done much more quickly.

Let me put it another way, problems are going to arise with any website. If you don’t know how to fix the issue yourself, you will have to hire someone. This will cost both money and time as you wait for someone else to fix it.

And finally as you truly “learn the ropes”, you will be able to do more and more with your sites down the road. Sure, you might have a few more headaches early on, but it will pay off in the long run if you build your own websites.

3. Higher potential Return on Investment. At the end of the day, most of us are hoping to run a successful businesses. So, if I can turn a few hundred dollars into a $1,000 per month income stream…that’s HUGE! One of my sites that I built cost me about $200 to build. However, because I did proper keyword research and starting ranking #1 in Google for a high value keyword, this site was earning me $3,000 per month at its peak. Now this is an abnormally high return on investment…but the potential is there!

If you were to buy a site that was making $3,000 per month, you investment would be $60,000 or more just to start. To get the same ROI percentage that I earned with a $200 investment; the site would have to earn MUCH more than $3,000/mth.

So, while buying a website might be a good way to gain an income stream; its not even close when comparing potential Return on Investment.

Buying a website is not even close (to building sites) when comparing ROI potential! – Click To Tweet!

Cons of Building Websites from Scratch

Now perhaps I shouldn’t help Chris out by listing some of the reasons against building a website from scratch, but I’m going to in order to be fully open. (And to pre-emptively strike down Chris’ potential arguments making them seem less potent…hehe :) ). However, you should also note that while I’ve always been aware of these potential downsides, I’ve always personally opted for building websites as opposed to buying them.

1. Higher risk. Anytime you start a business from scratch its going to be more risky than if you bought an established one. This is counter-balanced by the fact that you also have a higher potential return on your money when starting from scratch.

The reality is that many new websites fail. This could be due to not properly targeting low competition keywords or for any number of reasons.

2. A Bigger Learning Curve. Learning how to find a niche, build a site, produce content, monetize, and more takes a long time to learn properly. This big learning curve is one reason many new sites never really get off the ground. If you buy a site, most of these difficult parts of the learning curve may be eliminated.

However, I will mention again that by learning all the skills yourself will actually help you in the long run.

3. Longer Time Commitment Before Money is Made. If you build a website from scratch, you won’t make money starting on day 1…but if you buy a site with existing revenue, you will. The reason for buying a site is to get that guaranteed revenue. However, the reason for building a site is to recognize that with the higher risks and longer time commitment you can achieve a much higher return.

Last Point

I personally have built lots of websites from the ground floor up, and as a result I’ve been able to quit my job and pad my bank account with the returns. Because building sites is such a low investment, I think its the ideal option for most of the people reading this. If you are willing to put in the time and effort to learn the skills needed, you not only will build a successful site, but you can also take those skills and use them on future projects.

You won’t learn all these skills if you just buy a site.

Overall, you need to find a strategy that works best for you; whether that’s building a site from scratch or buying a site. However, as I’ve taken all of these factors into consideration for my own business, I’ve found that building sites is the way to go, and is the strategy I recommend most people follow.

Have a different opinion? I’d love to hear you comments of questions below!

Chris’s Rebuttal In Favor Of Buying Websites

I’d like to start by saying that Spencer did a great job at outlining why it’s better to build websites from scratch instead of buying them. Several of his points I agree with because after all, I didn’t buy my first website until after I had already found success in building profitable websites. As I said at the end of my first article:

“When it comes to websites you should only invest money you can afford to lose!” – Click To Tweet!

which may eliminate some of you reading this from using this as a viable strategy to make money.

With that said I’d still like to respond to some of what Spencer had to say in his earlier post.

“Building a website from the ground up is actually very inexpensive…especially if you write the content yourself. In fact, even if you hire someone to write content for you, design a custom logo, and buy a premium theme; the investment may still only be a few hundred dollars.

When you compare a few hundred dollars that a website might cost with a few hundred THOUSAND dollars that people spend to start a “real” business like a restaurant, the investment is extremely low.”

It’s true that building a website from the ground up is very inexpensive and sadly this is the reason why so many people find it easy to give up. When you buy a website it’s like you’re buying a “real” business because it’s already established and earning revenue. Because of the up front cost and existing revenue stream, the ability to give up isn’t really acceptable for a website buyer.

For example, a website I bought for $6,500 back in late 2011 had Adsense disabled 9 days after I bought the website. To make a long story short it was a Terms Of Service violation that I didn’t catch because the previous owner had Adsense on the website for 4 years with no issue. In any case, I got the Adsense re-enabled and in roughly a year I haven’t had to touch the website and my investment is nearly paid in full. Had I spent a few hundred dollars building that website or done the work myself and Google disabled the Adsense it’d be easy to just throw away that work and move onto the next project.

I’d be wasting some money sure, but also my most valuable asset of all – time.

More from Spencer:

“Higher potential Return on Investment. At the end of the day, most of us are hoping to run a successful businesses. So, if I can turn a few hundred dollars into a $1,000 per month income stream…that’s HUGE! One of my sites that I built cost me about $200 to build. However, because I did proper keyword research and starting ranking #1 in Google for a high value keyword, this site was earning me $3,000 per month at its peak. Now this is an abnormally high return on investment…but the potential is there!

If were to buy a site that was making $3,000 per month, you investment would be $60,000 or more just to start. To get the same ROI percentage that I earned with a $200 investment; the site would have to earn MUCH more than $3,000/mth.

So, while buying a website might be a good way to gain an income stream; its not even close when comparing potential Return on Investment.”

I agree that investing roughly $60,000 for a website earning $3,000 per month is a lot, but as Spencer said his example website that got to $3,000 per month was “an abnormally high rate of return on investment.”

When you are buying a website already making $3,000 per month there is a much higher likelihood that website will continue earning money vs the chance that you will be lucky enough to reach that monthly income mark building a website from scratch on your first, second, third, fourth etc tries – Otherwise, I’m sure I’d be a millionaire by now! One of my better or more successful websites was making thousands of dollars per month and I later sold it for six figures, but if it were that easy for me (or anyone) to create these successes I’d probably be off snowboarding, surfing, playing video games and doing a whole lot less work than I am right now.

So… Should you build a website from scratch or buy an existing website?

Ultimately the one factor that should determine whether you should buy a website instead of building one from scratch is whether you have more money than time. When I first got started earning money online, making an extra $200, $300 or $1,000 per month would have been great for me. Now with 6+ years in business and going on 4 years full time an extra $1,000 per month doesn’t really have as much of an impact. This is precisely why I try to find as many ways to make my money work for me rather than spend more of my time working for money.

In every case, the websites that I buy are purchased with the idea that the work can be easily outsourced so that I don’t have to do anything except collect the check. Yes, I know that when you build a website from scratch you can reach this point as well, but when you buy a website you get that instantly. If you’re building a website from scratch you’re going to be trying a bunch of things, some will stick, others won’t and you may or may not make money.

For me it’s all about ROIT – return on time and investment. The reason why I’m now no longer buying websites for under $10,000 is because I need to make ever increasing amounts of money from my investments to warrant the time I spend on new projects or I’ll stop being able to grow my business. By the same reasoning it’s hard for me to justify building a website from scratch unless I devote a massive amount of time behind it so that it can turn into a much larger income stream. Likewise, this is why (of the millionaires I’ve met that are buying websites) most are generally only buying websites for $100,000+ and up.

“I strongly suggest if you’re just getting started without much cash – Start with building websites.” – Click To Tweet!

In the end we all want the same thing – to earn extra money online. For some it’s just an extra $1,000 a month while for others it’s the desire to build an income stream that can replace our day job. For the past several years I’ve loved finding all sorts of new ways to make extra money online and I hope that you ultimately find something profitable and enjoyable to do.

Spencer’s Rebuttal In Favor Of Building Websites

Overall, Chris makes some great points about buying websites. In fact, what I love about this debate is that BOTH are great options! After reading through some of “Big Man” Guthrie’s arguments, I think its important to stress that whether or not to build or buy a site will likely depend on your current financial situation and experience in building sites overall.

If you have money to spend, buying sites may be a good option. But even so, if you have no experience, you are likely to make a poor site buying choice because you may not know exactly what to look for.

Here’s are just a few of Chris’s points that I want to respond to.

“If I didn’t waste all of my time trying to build that community from scratch I could have avoided all of the countless hours I wasted trying to create something that was never going to be profitable.”

Another way to look at the time Chris spent on this “failed” forum community is to understand the valuable education he learned. By building a community and vibrant site he learned how to overcome many of the basic struggles that come with getting hosting set up, designing websites, managing content and a community, along with MANY other little issues that come up when building an online business.

This early experience has likely helped Chris make smarter decisions, the ability to customize and monetize sites more quickly, and much more.

And of course he learned that a forum is probably not a good way to make money :-).

Another quote from Chris:

“Or even worse the “best pink bicycle scooters” website could start making money for a few months and then Google releases a new update and that website stops making money.”

Well, the truth is that Google doesn’t care if you built your site from scratch or bought an existing website. Either site is JUST as vulnerable to a Google update. In fact, the Panda and Penguin updates are perfect examples of large existing websites getting penalized. Here’s just one list of authoritative sites that were negatively impacted by a Panda update.

So, if you decide that generating traffic via Google is part of your business, then it doesn’t matter if you’ve built the site from scratch or purchased it, the risk is shared by both options. So the risk is actually greater if you’ve invested thousands of dollars to buy a site and have that investment disappear overnight from an algorithm update.

For either option, just go in with your eyes wide open; you need to be aware of the risks, and a Google change is a risk for both options.

Chris also said:

“Since then I’ve had some great website buys as well as some occasional losers that didn’t provide as great of a return.”

Overall, I know Chris is profitable with his website buying business; however, even with all of his experience he still buys some that lose money. I point this out simply to again stress that if you don’t have any experience building or buying websites, you are not very well equipped to go out and buy an existing online asset.

You need to gain experience and the knowledge of what metrics to look at before buying a site, and I contend that working through the process of building one on your own is a great way to gain that experience…and can be done for much less money.

And one final quote from Chris:

“I’ll concede that if you don’t have money that you can afford to risk then this certainly isn’t an option for you, but if you money than it’s worth pursuing.”

I agree 100%. If you have money you are willing to risk, you can “learn the ropes” by purchasing a website. I suspect that many people reading this post don’t have the money needed to buy a site; and for that reason, the resources you probably do have (time), will be better spent starting one from scratch.

Overall, I think Chris and I probably agree on at least this point: the option that is best for you really depends on your money and experience that you have.

“I like building sites because the potential ROI is much greater and the initial investment is low.” – Click To Tweet!

But the reality is that both are great options for an online business; just take a look at the pros and cons and make the decision that works best for you.

Final Thoughts:

Justin here – HUGE thanks to both Chris and Spencer for this post! I tend to learn so much when people are debating different viewpoints and I hope this was as valuable for you as it has been for us.

What do you think were the most compelling arguments? What points did we miss? We’d love to hear your thoughts in the comments!

If you dig this post and want to see more like it, please feel free to use the links below to share on Facebook, Twitter, etc. If you’d like more valuable debates and case studies, sign up for our email list!

I was curious to know where do you outsource the work for the sites that you buy? Right now I build my own sites but as my portfolio grows I may need to outsource some of the work to maintain the sites that I build or buy since I am thinking of diversifying my portfolio to include sites that I buy. Any suggestions on where you outsource?

Our “real jobs” have been running our outsourcing company here in Davao City, Philippines…so we have easy access to personnel that you might not have in your current situation.

You can go through the application/hiring process on sites like oDesk, eLance, etc. If you’re brand new to hiring offshore staff, I’d really recommend checking out a service like VSF as mentioned on our resource page: http://empireflippers.com/resources/

We’re friends with the owner (Chris) and have paid for the service twice ourselves when looking for staff and they both worked out well for us. :-)

Whats the name of your outsourcing company as I may have need for using those services in the very near future. I’ve had articles and emails written on Fiverr but the quality isn’t all that great. I’ve also used a few other resources but I haven’t had much success with getting quality work done. I wouldn’t mind paying a lot more for quality work. I”m trying to find a small handful of people that I can use on a semi constant basis. The resource page helps a lot so thanks again.

It used to be “TryBPO”, but we’ve now wrapped our outsourcing company under the banner “Empire Flippers”. Feel free to reach out when you’re reading to get started with a team of agents and we’ll go through the process of getting you up and running!

Fabulous results for the IntelliTheme that should make your April 2013 earnings picture shine.

I enjoy a spirited debate, well done. However, like others, I would like to have seen the participants go after the win. There were some exceptional points, (“chunky gold nuggets in here”). But I don’t feel either participant was able to persuade, a majority of people, to either of their points of view. So no clear winner. Bummer…

I have only recently picked up on Justin and his EmpireFlippers team and their many offerings. I find their advice very down to earth and intelligently put.

The problem, as I see it, is one of knowledge.

The risks can be accessed easily enough with information obtainable from the very people that argued the points and provided the forum to present the debate. Knowing your own internal motivations may be very important.

How could you buy a site or domain without knowing if you can go the distance? And, What would happen if the first attempt failed? Would you count it as a failure or as a cost of learning? If you see either of these processes as viable for you, you are entering the University of IM, and it will cost you something, be it time, real money, or both. Most likely both.

I am 67 years old. Back in late 2004 and early 2005, when I was younger, tougher, stronger, and the world was my oyster, I did it all. I was very successful at it. My first venture into internet marketing was based on finding something to do, other than my brick and mortar businesses, that i have been very successful in. I fooled around for a few months chasing other peoples ideas and concepts. Then decided to just do it my way.

Gambling is my avarice and my strength. I had no fear, perhaps this was foolish, of losing my total investment. I was young and if I lost all that I invested, which was substantial, I could earn it back. It was a bit like jumping into the sea without knowing what types of fish were in the immediate vicinity. Crazy, but it worked out, lucky me…

I started my career with eBay. In 2004, apparently, no one even knew how important it was to do KeyWord research. I didn’t know where to start so I had to do a form of KW research just to get started. What I found was, lot’s and lot’s of people were searching for the KWs Corvette and Mustang, and there was a huge market of Corvette and Mustang things on eBay. Viola, a match made in heaven. G, at that time, was selling the KW’s and their derivatives for less than .15¢ per click. I rapidly became the highest converter of eBay memberships. At that time they were paying out $24.00 per signup. I was doing thousands of these a day, I was making big money at an extreme low risk, other than getting paid. After three months of making $100K plus, eBay, in their infinite wisdom, decided that I was competition for the same KW’s as they were after and they started cutting my paid commissions by 50%. I could have the derivatives, but not the primary’s. Odd don’t you think? While I was still making excellent money, I felt cheated and packed it in.

But I had learned a thing or two from this experience. I took my marketing talent to a major seller of over-stocked products. Again a little research told the story. There were some really hot products, with really cheap G CPC. In the first 20 days of marketing for these folks, I sold over $1,000,000.00 of product. From those sales I negotiated a commission arrangement with them that was exceptional in the industry, and went on to sell $10,000,000.00 of product for them in the next 3 months. The only difference with this project is that I actually had a site that I built and sent the clicks to. In the eBay stuff I just sent them to the pages on the eBay site with the strongest resemblance to my KW.

These two forays into internet marketing provided funding for the purchase of an extremely well known IMer’s web site for about $350K . The site was grossing $25 K per month, with a net of $15K to $18K. I did get a non-compete and non-disclosure agreement signed, but this particular marketer had other plans and used the site as a marketing program to sell other products and sites. Despite this treachery, I was able to increase the site’s revenue to well over $200K gross monthly, I will let your imagination fill in the blanks as to the net. This site is still around today (it’s the one attached to my name) but it just poops along doing nothing very much. PPC is just to pricy to run this site today.

During this really exciting ride, I built some additional sites that each were selling eBook products of my own creation. Again I used PPC in conjunction with these sites, as well as SEO, which I knew very little about. These sites were extremely successful until the first of G’s slaps, and the constant G finagling to get top dollar for their KW’s in the PPC arena. All of these sites are still around, all are doing a few hundred a month without any direct involvement from myself or anyone else.

After all of the slaps I finally got really pissed at G. I decided I would not, under any circumstances, willingly put money into G’s pockets. As an aside, the site I made to sell for the major seller of over-stocked products, also had Adsense on it. It brought in $15K to $20K month after month. Of course I had more than 25K visitors per day, that were extremely well targeted, for the landing pages I sent them to.

For several years now I have been flailing around trying to learn this SEO thing. I continued to watch G slap the living be jeebers out of all and sundry, and decided there was a definite pattern here that I might be able to capitalize on. G was very consistent with there slaps, and their stock value was plummeting each time they slapped the market and lost more and more advertisers. I sold the stock short before the slap and bought back in after the effects of the slap wore off. Revenge was sweet.

I have followed Gideon with his video blog for years. Somehow, someway, that is how I landed here at EmpireFlippers. Lucky me. These guys have got a process that works big time. I am a little confused whether to use the (ExMatchLS * CPC) * .01 = $Value from the “Building A Niche Site Empire v1.3” or the 10%Searches 5%CTR 50%CPC + 50% for LTS from the “Easy 5 Step Keyword Research” to compute an estimate of Income but the process of doing the KW research is crystal clear. If I had this method of doing KW research back in 2004 and 2005 I would have to stack my money in Fort Knox with the Gold.

Seriously though, these guys are giving access to some of the best possible information on the internet.

For me all of this runs down to this conclusion. I will build sites all day every day. If I get a good EMD I can, at a minimum, sell it to someone else for more than the cost to have purchased it. Sometimes far more. If I keep things tight, and follow the advice given, it feels to me that this is the least expensive, and most productive path. I have done both, but look at the risk taken on buying a site for $350K. If I weren’t so lucky, I could have had one heck of an expensive throw away site.

So, for clarity’s sake, I would build out as many sites with this process as possible. I would keep things very tight and neat, following the process closely. I would only modify the process if I happened on an improvement as I was following the process, I can’t imagine this as much of a possibility. I did well buying the site I bought, but the risk was enormous, and I won’t be doing that again soon.

The thing I love about debate posts is the fact that (even if there’s not a winner) the argument itself can bring out points from both of the participants that they might not have made otherwise. Definitely not a clear winner here, though…that’s true.

You’re spot-on when you mention it costing you to get started with IM. It’s a combination of time and money…it’s usually best to give more of the one you have more of to spend.

A $350K site purchase would be way out of the realm of what we’d be willing to spent at this point…sorry it turned out badly for you. It sounds like a great learning experience, though…I’m sure that’s helped shaped who you are today.

Keyword research is critical whether you’re building niche sites, authority sites, etc. and it’s why we hammer it home so often! :-)

I really think that’s personal preference. We would choose a .net over a .org, but I’m not sure it really makes a difference.

It DID make a difference for us when we chose a .info, .biz, or used dashes in the domain, though. I’m just not sure whether it spoke more to the TLD or the fact that (with the other domains taken) they were more competitive and harder to rank for! :-)

Really Awesome post! I agree with both points, but in the end of the day I would never jump into a business area I dont know anything about, so no matter what I would suggest for people to build at least the first website from scratch the get the early learning points.

Still…I think some have the cash to fast-track their learning curve…you definitely will learn more on a site that already has earnings/traffic. It just comes down to whether you can afford the learning experience! :-)

I think there is another point in favour of buying sites: old sites are appreciated by Google faster because Google likes the aging sites therefore it’s easier to rank and be on the 1st page. Plus old sites usually have good backlinks already. It becomes even more important now when Google has already decreased the importance of Exact Match Domains (EMD). So you can easily find an old site with high rank backlinks and make a fortune from it even without EMD….

I believe that for many people, the issue of buy or build will come down to many different variables. Every situation is different so there is not really a clear cut winner that can be set in stone.

I have been building and selling sites privately for several years, and in my opinion, building sites is about three things:

1. Content
2. Traffic
3. Conversions

The problem that most newbies will have is that they will get so caught up in doing the work (and the steep learning curve) required to deliver those 3 things that they become technicians instead of business owners. In situations like this, selling is a great option because it allows them to get paid for their hard work and let someone that is more experienced (and interested) in growing the site to take over and run the show.

For my business, it is all about “working the system”. Once you have a rock solid system for creating content that is worth sharing and then getting traffic to that content, you are able to focus on conversions. If the conversions are not there, you can either improve them or look at an exit strategy for the site. I like the challenge of improving them but in some cases it is more beneficial to sell the site and move on to more profitable projects.

I bought my first (and only one so far) website in November for $2500, earning about $40 per month. I saw potential, nice traffic… I did nothing, but tweaked adsense and by today my return is $2857 so I’m pretty happy about the purchase.

I haven’t had any success with building my own sites. That’s because I did not find reliable writers yet, and don’t have much time with studying Uni, and working 50+ hours a week.

Wow… that was an awesome read. Both Chris and Spencer made terrific points. My takeaway is that the upside is much greater with buying websites… as you can buy huge sites and grow them even bigger. However, most people are better off building their own websites for 2 reasons. The first, is cost. Sooo cheap. Second, and more important, is the education they get from building the site. That education will pay huge dividends down the road.

Great debate for my penny worth im more inclined with Spencers approach especially if you’re a newbie. If think its important to understand how to build a site from the ground up and get the experience. You are then in a better position to understand what you’re getting into if you later decide to invest in buying established domains IMO..

This was great guys! Info coming from two online entrepreneurs I respect most and available on one of the sites that is a primary resource!

Both tactics are just that, tactics. It takes an entrepreneur in either model to make it a business.

I believe once you get to a certain point, buying bigger sites will allow you to make bigger steps forward. But you can also test out new industries, niches, etc. by building your own sites. Also, a handful of small sites and help to build up a bigger authority site and not just in a black-hat blog network way.
Personally it is a plan to build both of these concepts into my business so I can take the cream of the crop when my team comes across either a site that could use some revamping or when they come across great niches that haven’t been tapped effectively.

P.S. I wish we heard from you more over at MMOTI Chris! And the public niche sites have been a springboard for me Spencer!

Hey Miguel in regards to my post frequency: It’s tough because I don’t want to make most of my money by talking about making money online but rather by doing stuff and if I focused more of my attention on the blog then naturally I’d start making more money there, but the online business niche is relatively tiny compared to the more mainstream areas.

Not saying there is anything wrong with that, but I’m much more interested in exiting a 7+ figure business where few people know who I am than speaking at the next UltraCoolSocialWebExtravaganza Conference.

Great viewpoints from two very successful guys, both of whom I’ve looked to for my own projects.

Spencer and Chris both make valid arguments, but they are simply two sides of the same coin. There is no one right way to start/have/build an online business.

Just like Chris and Spencer, most of have to put in the time to learn as much as we can, even if that means starting a few sites that are losers. Once we’re educated, being an entrepreneur means weighing risk and reward and making an educated decision about what will work best in any given situation.

Sometimes that means spending the extra time to start a site from scratch that our experience tells us should be a winner. Sometimes that means buying a site because our time is more valuable. Either way, we’re in this to be profitable and that means looking for the most profitable angle to approach from.

Great job Spencer and Chris, and thanks Justin and Joe for putting this together.

Hey Dave thanks for commenting and yes I agree with you. One thing I’m struggling with is just what to work on next. I see so many opportunities to make money and grow my business it’s just hard to decide which to go after.

I’m actually going to take a bit of a break and try and focus on some lower potential earning projects but that have near 100% success rate since I’ve had a lot of personal friends that I’ve known for years ask how to earn some extra money online that is more risk free.

First off, congrats on the IntelliTheme launch. I picked up a copy in the JV blast, absolute killer theme!

Personally, I build AND buy websites. I really love the challenge of building a quality site. I’ve actually had a great success rate with the sites I’ve built. My biggest earning site is one that I built, the second biggest earner site is one that I bought. My biggest fear in buying a site is getting hit by an algorithm change that tanks the earnings. My biggest problem with building sites is procrastination. But for now, I’m sort of in a sweet spot between building and buying. I’ve bought sites from Flippa, EmpireFlippers and Chris Guthrie. Only the Flippa site crapped out. Thankfully the purchase price was less than $200. I bought the site blind, before I knew what the heck I was doing. Total newbie mistake.

Chris – Great new book, loved reading it and plenty of good advice. The site I purchased from you is kickin’ ass!

Spencer – Your NSP is priceless! I plan on picking up Long Tail Pro this week. Your NSP is ranked #1 in by search results. Massive congrats on that one!

Justin and Joe – Keep doing what you do and let’s get some more sites up for sale. Chompin’ at the bit guys to buy a few more sites. Just need a better selection to pick from. Thanks again guys, awesome post!

Awesome…glad you’re liking the theme! We’ve had some tremendous feedback (and great feature requests) since launching with Mark Thompson. We have a TON of new users that, ultimately, will help us ALL out as we continue to improve the theme with their feedback.

I haven’t picked up Chris’s book, but I’m kinda tempted to now.

I’d love to find out if there’s a way to build a process around finding acquisition targets that’s broken down and that we can have our agents do for us. If possible, I think we could build the process around buying sites almost the exact same way we’ve done around building them.

Working on more sites! We’re building some out that should be reading in a few weeks. We’ve checked out a few vetted sites recently that simply didn’t make the cut and we had to reject. :-(

The problem with buying websites is people typically overvalue their domains. There was a time name.com had great expiring domains for sale, but now they jack up the price after the initial expiration (picked up a couple PR3’s with backlinks for $9.99). Buying existing domains to build, still.

If flippa is the marketplace, I’d be even less inclined to buy…so the question is, where are these domains you can buy that are valued reasonably?….I sure haven’t found the marketplace for that yet.

EMD is losing value and domain age is gaining value….I still say buying aged domains from godaddy and building them up is the way to go….

You said you’re not inclined to buy domains from Flippa…have you tried GoDaddy auctions? What about SEDO? http://www.sedo.com/

We’re not really in the domain game ourselves, but plenty of people advocate purchasing aged domains and have had some success there.

One last point – You mentioned people overvalue domains. Another thing they WAY overvalue is their blood/sweat/tears in creating their site! They think that because they spent $X building the site, it should be worth $X+Y and that’s simply not the case, unfortunately.

Well the real problem with domains is that you can run into any owner and it doesn’t matter how much you think the name is worth. They hold the name and if you want it you either gotta try and negotiate down or pay up.

Most I’ve spent for a domain is $5,000 and then another one for $5,000 last year.

Hey guys,
Wow talk about an overload of information in that post, You could turn that into an E book, titled – Adsense king fights Amazon King.

I bought my first website the other day, after 2 year online, And I am really glad I did. It was great to be able to see how other people were going about doing things.

And interestingly enough I created my own website the other day, using Spencer and Chris, tools and plugins (longtail pro and Easy Azon) and lots of tips from them (And you guys of course) and it was the first time I got 1st page ranking for a keyword I set out to get.

Creating your own website is a great way to learn, but as you grow and your online business prospers, you should absolutely try buying websites.

I’ve never used Chris’s tool (Easy Azon) but have heard good things about it. Awesome to hear about your 1st page rankings…Booyah!

I think that (if we head down this route) Joe and I would be better off purchasing some Amazon or dropshipping sites ourselves. We can use those as platforms or models for starting to build out our own.

The guys that purchased Chris Guthrie’s site never made their money back. Mainly because they foolishly purchased a niche affiliates site for 6 figures.

I’d only buy an ecommerce website that sold products that are hard to find, or if the site has a special exclusive relationship with the supplier, or the ecommerce site sell it’s own custom made products.

The site would also have to be at least 3+ years old and get a lot of traffic organically from several places.

Did you purchase the site? How do you know they didn’t make their money back?

While a six-figure affiliate site purchase may seem foolish to you, it’s all relative. There are larger companies that purchase (effectively) affiliate sites for much larger sums than that…are they ALL foolish?

You mention you WOULD only buy sites that meet your strict criteria. I’m guessing you haven’t purchased any yet yourself? It can be easy to criticize from the sidelines…

I can’t really comment on the larger sale because of the agreements I signed. I do believe my non compete in the mobile computer space ends soon though (I’ve gotta look that up in the contract again to verify)

Rather than buy vs. build, this is really more a debate between build something you’ve bought vs. build from scratch since most of Chris’s comments were about building projects for existing sites – but what an excellent idea for a post! I’ve done a little of both – bought and built from scratch. I still can’t say which is best; sites I bought were laid low by the EMD, and sites I’ve built and poured sweat into have laid fallow. I will say that the mechanics of building a site can be compressed greatly to where the cost in time is very low (mostly in keyword research). I can have a site fully functional in a couple of hours or less if the content is ready to go, so $10 for registration, plus cost of content ($50-$75 if outsourcing 5 articles or so). In general I would say that building from scratch has the best ROI (as Spencer said), and that buying makes more sense either to learn from (reverse engineer – get inspired every day by the fact there are clicks in you Adsense and look for ways to create more), or when a specific opportunity is seen to expand an existing property (just like real estate). Just don’t forget the cost of time spent searching for those opportunities.

I particularly liked your last insight – While Chris/Spencer talked about the time it takes to BUILD sites from scratch (and the lost opportunities from the losers that don’t pan out) you have that SAME problem when looking for sites to buy, eh?

Great point here Don. There is going to be a time investment for both options. Although it does depend on how much you want to “revamp” the site you’ve purchased. Hopefully, you will only need to do minor tweaking to increase its earnings, but that may or may not be the case.

Great material. I’ve been a ground-up guy for a few years, building a 1/2 dozen sites with a very steep learning curve. Along the way I have learned enough about SEO to make some money on the side consulting. Here’s the rub-now I’m so busy, I don’t have time to build sites. I may buy one. Ha ha- they are BOTH right!

If you have an effective SEO strategy, I think you’re in a prime position to purchase sites. Look for sites that have little to no SEO done or that are close but not-quite-yet ranked for some profitable, high-traffic keywords.

It’s great to see some people jumping in on buying sites, some jumping in on building sites, etc…I thought this would be an interesting topic!

I agree with the value of building sites, but I think it is a bit of a crutch for us…we’ve found a way to make them successful across the board and kinda rely on that. It will be interesting to challenge ourselves in new areas, I think.

I understand where Chris’s coming from – when you have plenty of cash coming in, your new task becomes how to best spend it. That’s the dilemma of funded startups…they have a TON of cash and have to figure out how to spend it wisely to quickly/efficiently grow their user base.

I think if you find an existing site with keyword research done and proving results AND it’s in a niche that is interesting to you AND it’s affordable, then buying a site might be the best first step. If we’re talking about $250-$1,000 then it’s a no-brainer – the cost of doing the keyword research, having the site design done and built, graphic work and content produced could easily hit several hundred dollars. Yes, it can be done for less, but you get what you pay for.

Hey Scott! – I hear you, but you’ve put quite a few conditions on the purchase! That’s my issue…it seems awfully difficult to find sites that meet all of the conditions. That’s one of the things we’re trying to solve with our marketplace – offer interesting and valuable sites to sale that have strong appeal.

I think if we’re going to sell $10K+ sites we need to do more to attract buyers at that level. (And possibly release more information about the sites WITHOUT putting the new buyers at risk of copycats)

It’s good to see a different perspective on things. I disagree that forums are a bad way to make money. It depends on the niche, and it depends on the community itself.

Also, Google Adsense is actually a decent way to make money with forums (not for many other types of websites). 2005 was a long time ago.

I made a few hundred thousand dollars with a forum a few years back (not with adsense). With my current forums I am using Adsense and getting £4.11 Page RPM. That is a higher rate than I am getting on many small content websites I have built.

It just goes to show, what doesn’t work for one person, will work for another. The second your community reaches 50,000 members, believe me, you will start getting a lot of offers via email.

Hey Kevin:
I may have been a bit too general in saying that you can’t make money with forums. I actually can see lots of opportunities to do well with forums, and your point is spot on that if the size is big enough you can do very well.

Yah I agree forums can make money in the right niches. But what I learned (and what I tried to illustrate by using a real life example) is that because I was new I never thought that my video game forum wouldn’t really make me much money.

In hindsight it’s obvious because most of the people on the forum were talking about video games they already owned an a console they had already paid for (so what could I – or an advertiser sell them?)

My point is that I spent all this time thinking that if only I had a lot of traffic I’d start making some good money but it didn’t really work out that way. Yes I was doing that forum partly for fun but had I built a community on a more lucrative topic back in 2005 I could have done a lot better i.e. like this guest I had on my podcast recently:

With respect to this debate im 100% on the buy over build!! why because you have something generating an income that you can enhance to cretae a faster ROI.

The problem with the traditional model of throwing mud against the wall (build tons and keep the good ones) is that most people have a 20% success rate and need to carry the cost of the 80% failure (plus the fact that its kinda depressing).

By buying an existing site you get a ton of data (or you should do before you buy) of how the site is and HAS performed. that way you have a much better idea of what its possibly going to produce.

A word of caution. if your paying 10-20x and you have no idea how your going to increase the income of that site over the next 6 months i would not buy it.

An ROI of over 12 months is just not something i can get my head around the world changes to much. after all that means that youve put work in and maybe spent money on content etc and youve only just got the cash back! if you invest in a saving product at even 4% you’d be better of.

For my self i both build and buy . I build when i cant find a site at a price i want to pay. Although these days im more inclined to build sites around brands im developing rather than adsense sites or amazon sites..

I almost wish I hadn’t read this. I’ve been thinking about building niche sites for years and now I finally have time to focus on it. I actually just spent an entire day with your “Building a Niche Empire” ebook, following it step by step and I’m really stoked about building my own sites.

I love the back-and-forth in this article and I certainly hope to get to the level where I can afford to buy websites. But for now I’m going to focus on building money-makers and maybe start looking into flipping.

But the key point I took away from this was the “Time” factor, and your return on your investment of time. Thanks! Great point! I can see where once you reach a certain level it makes more sense to buy than build.

I really liked the “time” takeaway as well…it’s something Joe and I had discussed a few weeks ago when he was looking at sites to purchase. They have to be big for it to be worth our time. (But small enough for us to not kick ourselves if we made a mistake!)

Do let us know how it goes with your niche sites! (Good to see you’re a Tom Ewer reader…I’m a fan too!)

Justin & Joe — really love the debate style of post. I think it is more engaging than a regular post (though, you know, those are *fine*), and really force you to confront the issue and figure out which side you fall on.

It’s just like the old podcast episodes where you both went head to head over like 5 topics (srsly, those eps were THE BOMB).

I think that whether you’re building or buying sites…knowing the fundamentals regarding keyword research, content, etc. is critical.

I love the debate posts too! We’ll have to see if we can sneak in more of the back-and-forth podcasts…those were pretty popular (and fun to put together!) Next week we have a pretty killer round-table chat with Chris Ducker that I thought was pretty awesome!

I’d love to do some kind of debate-podcast-battle with the LifestyleBusinessPodcast guys…should chat with them about it!

Great idea of bringing to bright minds together to debate the topic. Although I was hoping for a little more action between the two. There wasn’t any name calling or anything. Oh wait, Spencer did call him “Big Man” Guthrie, that counts doesn’t it?

Anyway, great points and great information. I wish I was in a position that Chris is in where I could afford to buy sites and make them profitable (or at least try to). It sounds like a fun business and something I look forward to in the future. Thanks for the posts!

Thats awsome guys. Thank you for the great debate. I am always thinking if buying a website would be an option. My biggest fear is to pay too much for a website. i am unsure to project earnings of a website in the future… maybe thats part of the risk, but for me, building takes way too long, especially for the high quality content that i would love to offer.

I definitely feel your pain. Still…there are worries when it comes to building sites too, right? What if you spend that time/energy building out sites that don’t pan out?

For some reason, the first sounds much more painful than the second, doesn’t it? Even though there are situations where the second could be MUCH more costly. Loved this discussion from two switched-on guys!

Yeah, I get your point. Maybe it is because earning money is for me much more difficult than investing time at the moment. So I can afford to lose time, but losing money means not having food in the fridge anymore.

Thinking of that i have another idea in mind: Could you do kind of a “follow up” on some of your clients? What happend to the sites they have bought and how did they progress?

Hi there, guys!
Great points all around! Doesn’t make it any easier for us newbies, though! ;)
I personally think that building a site from scratch is one of the most valuable lessons you can lesse learn. However, acquiring and optimizing existing websites is the more straightforward way to grow your portfolio, of you have the necessary resources to do it right.
I think that the magic word in this whole discussion should be: “opportunity cost”.
Doing everything yourself usually means that you work for a lousy hotly rate. The more you outsource, the faster you advance and you can concentrate on the tasks that give you the most bang for your Buck.
Buying am existing website is like outsourcing everything there is top this particular website, with the added benefit that you already filter to only outsource the websites that are proven to be lucrative.
Hope this adds another viewpoint!
Cheers,
Al

Hey all,
According to me, it depends on a type of person you are. Risk is with both sides. Buying will save you time, and building will save you money and will give you the option to mould it your way.

And it also depends on what type of business you want to do, you you want to create a community like pat flynn or daren rowse have then you should start from scratch. But if your aim is searches and click through rates then buying already built sites can help.

I think Spencer’s right in that you HAVE to understand and have the underlying skillsets required to make a site successful. Without those, you won’t be able to build a site, build out a purchased site, etc.

However, Chris is spot-on in that by purchasing sites, you’re able to ensure you get a fair return on your time invested with the site. Building sites from scratch will definitely have you working for pennies/hour at first!

Yes, opportunity cost is precisely the word I should have used. It really does just come down to the value of your time.

If you work a 9 – 5 making $100k+ per year then as long as you aren’t living like an idiot (i.e. spending all the money you earn) then yes building a website from scratch, analyzing how other websites make money etc will provide value. But it would make more sense to buy in that scenario.